Why Agencies Should Be Placing Their Bets on Data, Talent and Tech

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Heading into 2020, agencies were facing a period of intense uncertainty about where they should invest their resources for future growth. Some might even say the threats to agency success were unprecedented—except that the same was true a decade ago.

In 2010, the rise of mobile, social media and Big Data had left agencies under scrutiny to pivot and address the growing list of expectations and demands from clients. While it can be exhausting trying to keep up, the fact is that one thing remains the same: Agencies have been and always will be in the business of solving problems for brands.

The question that begs to be asked is what bets and investments agencies can make to succeed in a new advertising world order, even as margins continue to get thinner. There is no set answer to what makes the most sense. Yet, out of 26 shops that Adweek spoke to, most felt that even though there are headwinds to navigate, the agency community will manage to make its way through.

A tech and data learning curve

For the past several years, the signals of where big holding companies are headed are apparent. The likes of Dentsu, IPG, Omnicom, Publicis and WPP continue to make significant, multibillion-dollar bets on data and performance marketing.

“[Big holding companies] have not taken their eyes off the ball when it comes to data and analytics,” said 4A’s CEO Marla Kaplowitz.

Part of the reason that data and performance is a critical investment is that compensation models are changing. The days of agency of record (AOR) relationships are few and far between. The shift to a project-based model is much more common, and compensation occasionally comes from an agency proving performance.

“We’re very comfortably built on an old model that just doesn’t work anymore,” noted Nancy Hill, founder of the Media Sherpas consultancy. “Clients now pay on a project basis, and some of those last for years.”

To that end, upping the ante in technology and data with a focus on talent may represent the most significant opportunities for agencies to thrive.

Finding talent for success

Some agencies are taking cues from holding companies and building their own data practices. Indie agency The Shipyard, for example, has built a proprietary platform called The Helm that drives programmatic media and allows clients to uncover real-time insight into performance.

With a total investment well over $1 million, the agency’s CEO Rick Milenthal said the approach is designed to help CMOs who, as he noted, “are constantly being pressed to prove ROI and eliminate inefficiencies.”

Similarly, Work & Co. is betting that clients will seek even more in-depth specialization from agencies. As such, the digital shop is investing significantly in data, analytics and business intelligence.

“We can measure success in new ways and then iterate to keep taking our clients’ businesses forward,” noted Rachel Bogan, partner, product management at Work & Co.

A sidebar with the title "3 Tried-and-True Methods for Growth"

But even with investments into an agency’s overall product, John Durham, CEO of San Francisco brand consultancy Catalyst SF, said talent is one of the single most important components of success.

“Technology is important, but it’s going to be critical to figure out talent that can solve problems,” he said.

Indie agency Stoltz Marketing Group in Boise, Idaho, sees opportunity by investing in more senior-level talent, which can add value for a client and, specifically, CMOs.

“Larger clients need nimble, efficient and nonsiloed agencies to become extensions of their marketing teams,” said Jamie Ekman, president of Stoltz Marketing Group.

John Keane, CEO of U.K.-based shop Ardmore Advertising, for example, is seeking a range of conceptual thinkers, filmmakers for broadcast and social content and creative writers. But one of the critical places agencies need to look for the best talent isn’t necessarily in data or creative but, according to Hill, in operational leadership to ensure that all new investments are focused.

This story first appeared in the March 9, 2020, issue of Adweek magazine. Click here to subscribe.

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